Oil prices rose sharply above $100 a barrel today after the United States announced plans for a naval blockade of shipping routes to and from Iran through the Strait of Hormuz, intensifying global market fears following the collapse of ceasefire talks between Washington and Tehran.
Brent crude futures climbed $6.67, or 7%, to $101.87 a barrel in early trading, while US West Texas Intermediate rose $7.26, or 7.5%, to $103.83. The gains reversed losses from the previous session, when both benchmarks had eased on hopes that diplomatic negotiations might stabilise the conflict.
Market analysts said sentiment had shifted quickly back to a high-risk environment. One energy strategist noted that conditions had effectively returned to pre-ceasefire levels, with the added threat of US action targeting up to two million barrels per day of Iranian-linked oil flows moving through the strategic waterway.
The escalation follows comments from US President Donald Trump, who confirmed that the US Navy would begin enforcing a blockade of the Strait of Hormuz after weekend talks failed to produce a breakthrough. He also warned that elevated oil and fuel prices could persist through the coming months, adding a political dimension to already volatile energy markets.
US Central Command later confirmed that the operation would begin later today, stating that all maritime traffic entering or leaving Iranian ports would be subject to enforcement. It added that the measures would apply equally to vessels of all nationalities but would not interfere with ships transiting to and from non-Iranian destinations through the Strait.
Market observers said the announcement had triggered a rapid re-pricing of geopolitical risk, with traders adjusting expectations after a brief period of optimism around the ceasefire. Analysts at several financial institutions warned that oil markets remain highly sensitive to developments in the region, particularly any disruption to shipping through Hormuz, a critical route for global energy supplies.
Iran’s Revolutionary Guards responded by warning that any foreign military vessels approaching the Strait would be treated as a breach of the ceasefire and met with a decisive response, raising concerns of further escalation.
Despite heightened tensions, shipping data showed that three fully loaded supertankers managed to pass through the Strait on Saturday, the first such movements since the ceasefire agreement. However, most tanker operators have begun avoiding the area ahead of the expected blockade.
In parallel, Saudi Arabia said it had fully restored output through its East-West pipeline, bringing capacity back to around seven million barrels per day. The move is seen as an effort to stabilise supply lines as fears grow over potential disruption in the Gulf.
Analysts say market direction in the coming days will depend heavily on whether the blockade is fully enforced and whether diplomatic channels are reopened.
